Monday, October 20, 2014

When HP took over UK software group Autonomy the results were pretty bad. So bad, in fact that HP went into a full-blown crisis, which inspired the company to break up the two companies. This

news comes after allegations have been going back and forth between the two companies with each stating things like "fraud" and "misrepresentation" involved in the takeover with HP claiming that Autonomy overstated the number of contracts it had when the deal was being brokered.

CEO of HP Meg Whitman, whom has come under considerable fire for this whole situation, has decided to split HP's personal computers and printers business from its corporate hardware business, which has been highly profitable. Each part of the company will be worth tens of billions of dollars, though the deal itself is directed at making the large PC division easier to manage and focus on.

Whitman will take on the role of CEO of the enterprise division with Senior PC Division Executive Dion Weiser leading the PC division. In addition to that, Whitman will also be chairman of the PC division with the current Senior Independent Director, Patricia Russo, becoming chairman of the enterprise division. Some people have noted that this was the plan of Whitman's predecessor Leo Apotheker, who's idea of breaking up the two businesses was swiftly canned when Whitman took over. In addition to that, it has also been noted that both halves of the company are pretty equal in size, generating revenues of $55.9 billion last year.

HP was previously the world's biggest PC maker until Lenovo managed to snag the top spot last year. Lenovo has been increasing its presence in the American market with its low cost of production and quickly increasing technology. Whitman has had trouble finding HP's next area of growth in the computing world. Things like tablets and cloud computing have changed the face of the computing world drastically. As a result, Whitman has tried to branch HP into cloud computing, but with little success. That has also been exacerbated by her failed efforts to pull off a mega-merger with data storage giant EMC Corp.

Whitman is looking at the need to not only cut costs due to the falling sales of traditional PCS. What's more is that Whitman and HP are also dealing with the need to cut tens of thousands of staff members around the world. The decision by HP to divide the two companies will likely be seen as positive by those on Wall Street due to the fact that investors have been demanding sprawling companies with diverse interests break up into smaller divisions that are easier to value and easier for management teams to oversee.

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